just as supple -- a sample of the discussion at the brookings institution. you can see the event>> in justa discussion on public education with the mayor of sacramento, kevin johnson, and former washington, d.c., schools chancellor, michelle rhee. secretary of state hillary clinton will provide an update on the situation in libya. after that, a discussion on home enter ship with comments from jerry bernstein. a panel of experts on the future of fannie mae and freddie mac. friday night on c-span, bloggers, writers, and activists from the middle east

discussed their countries. they talk about changing the political system in egypt, iraq, iran, and saudi arabia. >> iran is really bad. this is one side of the coin. the other side is the darkest side. we lived in a very dark area. our studies have never been heard. we are very strong in terms of oil. we support the west with the oil. it is the homeland of is long. >> what's the summit from york city on friday night on c-span. -- what the summit from new york city finite on c-span. >> nearly 1500 middle and high school students entered documentaries on the famed "washington d.c. through our lance."

on c- the winning videos span and meet the videos -- and meet the students who created them. >> next, a discussion on public education was sacramento mayor kevin johnson and former washington, d.c. schools chancellor michelle rhee. mr. johnson heads the education department's mayor advisory council. after leading -- leaving the d.c. school system, michelle rhee founded "student's first." from the clinton school of public service from the lead -- from the university of arkansas, and this is one hour and a half. >> in his 2011 state of the union address, or that obama mentioned the words "educate and education" 14 times.

it underscores the need for real, lasting reform in our education system. the president asked us to do what is necessary to give all children a chance to succeed, but in doing so, he is admitting that we have too many kids in this country who are born into a search from stances where success is not a legitimate option. our guests tonight are out to change that. michelle rhee is a former classroom teacher and a founder of the new teacher project the certifies and supports teachers in a high poverty schools. she is known for her tenure as the chancellor of washington, d.c. public schools in her new role as founder of "student's first" the stated mission is to pursue transformative reform. sacramento mayor, kevin johnson,

is a former nba star with a commitment to education. in 1989 he founded st. hope, a community development corporation to revive sacramento education. he has made education a top priority. putting students first can't make an incredible difference. take, for instance, patrick. i met patrick in the first month as a teacher in new orleans. i came upon him violently beating another student. patrick was from new orleans, but had moved up river post- katrina. he looked fairly menacing and he had a reputation. he was assumed to be an 18-year- old sophomore in danger of falling behind. i've learned he was a good basketball player.

unfortunately, his portraits had left them ineligible. however, our basketball coach promised patrick that if he worked hard and stay out of trouble, not only would he be on the team, he would graduate from high school. two years later, patrick was a varsity starter. in class he worked harder than his peers and he graduated last may. his senior project was a children pocketbook about the importance of teamwork and dedication. last month, patrick sent me a message telling me he is attending community college in baton rouge. he is the first person in his family to do so. there are many patricks out there -- good, smart kids needing a chance, a few teachers or coaches who make it a priority to ignore their past and focus on their futures. teachers or coaches who find what motivates their students and used those passions to

connect students to their education. it is my hope that people like michelle rhee and emmer johnson can inspire us to put all its -- and kevin johnson can't inspire us to put all students first. can -- can inspire us to put children first. we want to get every patrick out there the chance to reach his or her potential. nothing less than the future of our nation is riding on it. would you please join me in welcoming gate -- in welcoming two education leaders who are working to ensure a brighter future -- michelle rhee and mayor kevin johnson. [applause]

[laughter] >> welcome, everybody. thank you for being here. michele and mayor, thank you. this has been one of our most requested programs. thank you for being here and being part of it. let's start with a little bit about what you are doing in education. could you give us your thoughts on the state of public education in america today? >> i will go first. she is the boss. the real answer is it sucks. we are nowhere near where we need to be. there should be an outrage. there should be a national

crisis. we should all be waving the flag and doing everything we can. the children in schools today will be the first generation that are less educated than their parents. that, to me, is alarming. the richest, most powerful country in the world is losing its competitive advantage. secondly, if you go out 10 or 20 years, there will be 120 million jobs that will require a high skill employees. at the rate we are going, we will only have 50 million kids to fill those jobs. that means 70 million will be filled by children from china and india. that is not a good state. thirdly, we are spending twice as much money as we were 30 years ago and the results or not any better. as a country we need to make this a top priority.

it is not just for washington. it is all of us doing our part whether you have kids or not. there are too many kids who are languishing in schools that are not doing well. if there are also kids who live in nice neighborhoods. their schools are not serving them. >> i concur with him. we are in a position right now in this country where if you were to tell me the zip code a child lives in and the race of that child, we could with pretty good accuracy tell you what their achievement levels or. that is one of the most un- american things i can possibly imagine. it is be trained the ideals in which we live and we were founded on. the idea that how much money a kid has or what? there were born into -- they

will only rise to a certain level. nothing else serves as a cry to the american public to engage to fix and transformed this system is that fact. i also want to say that i think we are at a unique moment in time. over the last few months we have -- education reform has begun to seep into the mainstream with the movie " waiting for superman." abc focus an entire week on education issues. because of those sorts of things, they are bringing education reform into the mainstream. they are bringing the issues to everyday people. i think there is a moment in time that we have never seen before in this country where we

had the opportunity to actually thinks the problem. i am feeling somewhat heartened as well right now. now is it. >> both of you have experience in public school districts. what role since cds playc -- cities play in terms of leadership? >> there is only so much that can be done at the federal level. there is only so much that can be done at the state level. the real work in education happens at the local level. in terms of governance, to be quite frank, i do not think the current governing structure of the vast majority of our school districts works.

you have nine, 10, 11 school board members all representing their local neighborhoods. oftentimes they are elected with union dollars in a very low turnout election. you have a body of people who are not experts in the field who are determining policy. mostly if you have ever seen a school board meeting, not that you would want to go to one, what you would see is there is very little or no mention of children, schools, or student achievement. everything is about adult issues. that is a huge problem when you have this accountability where basically there is no one person in charge. then you have low academic achievement levels. you have decisions being made for no good reason whatsoever. at the end of the day, no one is

held accountable. i am a huge proponent of mayoral control in schools. indeed a great mayor who is ready to prioritize these issues. where we have seen the most significant movement in this nation is in cities like boston, new york, and chicago. they have had in my oral control. >> and -- they have had mayoral control. >> you have been mayor in little rock and the mayor in north little rock. they care about their public school system. they do not have a choice. we cannot have a great city without great schools. any mayor says that is not in their job description is being foolish.

i had the mayor's task force on public education. arnie duncan -- i am trying to get mayors to understand that there is a spectrum of and all but. it is mayors controlling schools. at the basic level, it is mayor sticking their city services and the lining them with the school district. no matter the appetite, a mayor has to be involved in the public schools. i am proud that the u.s. congress of mayors came out strong on a policy. michelle will talk about it later. it is the third time we have done it. the first time we supported president obama's agenda -- raced to the top. then we supported common core standards. we think that is important especially if you want to compete internationally. the last one we did this week was called "last in, first out."

it was a significant policy that is not good for children. it is seniority-based laos. you lay off teachers based on seniority. that is not in the best interest of kids. if you are talking about teachers who had been there forever who may not be doing well. the quality of work is not considered. because they are the last in, they are the first out. that is not putting a child's interest ahead of adults. that is a common theme you hear us talking about. anybody who cares about reform will say students first, the kids first. mayors have a responsibility to play an active role. at the end of the day, you can lay out things that are very important on the state level and talk about legislative policies. but the real work is on the local level. >> i have served on the school

board and been to several meetings. we attempted to set up meetings with the city board. it was a struggle. the city board and the school board were not communicating very well. many students in urban areas -- you talk about the role of cities and accountability -- they walked through unsafe neighborhoods, and drainage ditches that are full, sidewalks that are not there, crime on the streets -- yet you talk about cities and in control of the schools. in the neighborhoods that's around the schools, in many areas is dismal. >> bill had, honey? you can go. -- go ahead, honey. you can go. [laughter]

in my last year on the job, one morning i decided to visit one of our high schools. it was one of the law was performing high schools in d.c. when i show up at schools, i never stop by the office and tell someone in there. otherwise everyone would be on their best behavior saying, "she is in the building." i would just go and walk around without being announced. i wanted to know what was happening in these particular schools. on this one morning, the first classroom i went into had five kids. the second classroom had nine kids. the third classroom had seven kids. i was trying to figure out where all the children were. i ask the teacher, "where all the children?" she said, "today is friday." i did not think that was a very good reason for kids to not be

in school. i said, "is that it?" she said, "it is raining, too." since when is the weather and the day of the week a determinant of our expectations of whether our children come to school or not? i walked into one classroom full of children. 35 kids in the classroom. some kids were sitting on the radiator. i was watching this class. it was a very dynamic teacher. he was very engaging. i asked one of the students, "what you think about your teacher?" they said, "this is my best teacher." i said, "why?" they said, "he will explain something to you if you do not understand it." i thought that was a low bar.

[laughter] i watched the rest of the lesson. it was a very good lesson. after walking out of the building, the young man i had talked to and two of their friends were walking out of the building. i said, "excuse me, young man. where are you going?" he said, "that was our first. period teacher." >> that is not what america thinks of when they think of a truant. you think of a kid who stays in bed until noon and then gets up. you do not expect that the children are making the conscious decision to wake up early in the morning to show up for class because they know they would get something right from their first teacher and then leave. where are you going to spend

your time? what are you going to get out that it? it gives you an indication that things are not always what they seem. kids will make conscious decisions. i was in harlem a few weeks ago. i was meeting with a group of students. i believe in talking with kids about real issues. i said, "lots of people believe that because kids are poor and because they are black or latino that they cannot learn because of all the environmental factors and the violence in your communities. what you think about that?" begins disagreed. they started telling me all the reasons why. one little girl said, "i want you to tell the american people that it is not about where we come from every day. it is where we are going to that counts." this is what the kids want us to know about the quality of

education. they will persevere to all the challenges on the way to school as long as we are making what happens within the school building worthwhile for them. >> a couple of things i think are important. we have something in sacramento. it is the city of sacramento sitting down with the superintendents. we have four different school districts in the city of sacramento. we asked them how we better align our services to meet your needs? there are three areas. when is school safety. the route from school, to school. the second area is around facilities -- joint use, libraries, community centers, poles, parks, a host of things. the third is after-school programs. as a city, we do a lot of these things. we are doing them willy-nilly as

opposed to doing what works. i think there is a responsibility for all of us as mayors to align our services to make sure they are making sense. michelle talked about mayors controlling schools. it really makes sense because america takes all of the resources at their disposal and worse with the school system. it that way it will not be disjointed and incoherent as it currently is. you do not need to come to the clinton's goal to realize some things do not make sense. we live in it on a regular basis. we have frustration on one hand, but we also have a sense of -- we are transformational leaders. our mentality is to change things and not accept them because that is the way they have been. if it is working, let's replicate it and let's invest even more in what works. if it is not working, we do not have time to make excuses. there is no city that will reach

its potential without taking care of its most valuable resources. that is its children. it is not happening near enough in this country. [applause] >> today, providence dismissed 926 teachers. do you agree with that? let me follow that with what do you think is the role of teacher's unions in education reform? >> this is about to get exciting. [laughter] >> i think that is my queue. -- that is my cue. [laughter] people ask me if the unions should change. how we get the unions to do this? how do we get the unions to do that? i am think we are focused on the wrong things. the job of the teacher's union

is to protect the priorities, the privileges, and the pay of their members. they are doing a really good job of that. we cannot begrudge them because that is their job and they are doing it. they are doing what they are supposed to be doing. the problem is not the teacher's union. the problem is that we have created an environment in this country where we have allowed this particular interest group to have a tremendous amount of influence over policy and legislation. on the other side, there is no national organized interest groups advocating on behalf of children. >> are you going to do something about that? >> that is why i started my organization, "students first." it provides balance in the landscape. about 4her's union has

million members across the country. you cannot tell me that they are not at least twice -- 10 times as many americans in this country who would be willing to join an organization that is looking out for the best interests of the children. i believe americans are ready for this. i believe people are tired of the poor performance of american kids and the fact that we are not serving our children well in schools. i think they are ready to make a difference. my organization has been up for about 10 weeks. it has been amazing. we have over 170,000 members. we have had millions of dollars, in through the door for a member saying, "we want to help." we will be able to build this into one of the most influential interest groups in the country. one that is advocate on behalf

of the interest of kids. once we do that, what the teachers unions decide to do or not do will be irrelevant. the american people will be saying it is important to put children first. [applause] >> brother. -- bravo. >> i have not heard the news out of providence. i will say a couple of things. i do not think it is the best move i have ever heard. there are hundreds of thousands of incredibly hard-working, very effective teachers who work way too hard for way too little money every single day. anything that we do, we cannot make sweeping judgments about an entire profession or entire group of professionals. i think that is wrong.

i think that people need to sort of tone down the theatrics a little and actually get to the root of the issue. if we have a better evaluation system in this country for teachers where we could differentiate and we knew who the top performers were and we knew the promising people were and we knew who the ineffective ones were, then we could make decisions based on performance that will benefit kids. these sort of sweeping things cause a lot of drama. it is not good or healthy for a district. it is not good were healthy for the children. i think what we need to do is be much smarter about how we treat teachers as professionals, recognizing and rewarding the best and most effective. for those who are not doing their jobs or adding value for kids, you got to improve your

performance where you have to go. [applause] >> i just had a couple of points to what michelle said. this is a misnomer on the work we do. there is no group of people who should be is deemed more than teachers. it is the most noble profession. we believe you should be rewarded, recognized, professionally developed. we have to do everything we can to lift the bar. other countries are taking the brightest and best and putting them in the education field. we do not do that in our country. do not confuse when we are saying take on the union. we do not believe the union speech for the rank-and-file. that is the first thing i want to say. if the teacher's union are going

to be an impediment to a child learning, that is problematic. my grandfather was a sheet metal worker. he said the union's job is to protect and create an environment where you have good wages, benefits, and retirement. that is the union's job. if the union ever gets in the way of preventing children from learning, we have a problem. my grandfather was a card- carrying member of the local. i grew up in oak park, a poor part of sacramento. what part you call it in little rock? >> i am not going there. [laughter] >> ok. the poor part of sacramento, unlike little rock, is called oak park. i went to college at uc- berkeley. i played in the nba for 12 years. i came back to my home town and started running charter schools. we started an elementary school.

night high-school, the second oldest high school west of the mississippi, was about to be taken over by the state of california because it was underperforming. it had underperformed only 20% of seniors were graduate to go on to college. which meant 80% were, going on year after year. i go to the superintendent at the time to say can we run sacramento high school as a charter school. they were like absolutely. you can do a better job than we are doing. i am thinking of course i could. so, i go in and speak to a group of teachers. there were probably 100 teachers in the room. i said we want high expectations for our kids. we want to create a private school education for three. we want to raise the bar.

we want a longer school day. by the time i finished i got a standing ovation by the teachers. one ran up to me thanking me for restoring the faith in teachers. came back a week later, followed up on my same spiel and i got booed by the same group of 100 people. i am thinking what the heck happened. the teacher's union started to spread propaganda, your jobs won't be safe. you won't get paid what you were making before. it really turned a very promising opportunity into something very negative. fast forward, the next 10 months we were in a battle with the teacher's union on whether or not we would allow them to preserve the status quo or try something different because children's lives are weighing in the balance. they spent $750,000 to prevent

us from running this school as a new charter school. a law firm in the community gave us $500,000 of pro bono legal services, we end up prevailing. here is where we are today. the high school that was underperforming, 20% of seniors graduating going on to college. same group of kids, 80% graduating going on to four-year college. 80%. >> don't tell me if kids don't have access to a high quality education they do not as well as their counterparts who live in affluent areas. if a union or anybody wants to prevent those kids from having that opportunity we will fight like crazy to do our part. that is why we need you folks out there to participate in some shape or form. >> some people think charter

schools are the end all be all. others think they are way overrated and not much better than public schools, in some cases worse. you know i heard a lot of people talk about if it is a charter school it will automatically be great. number one, not all schools will be charters. number two, how do you monitor bad charter schools? >> does everyone know what a charter school first of all,? >> raise your hand if you don't know. >> a charter school is a public school utilizing public tax paid dollars but free from all of the burr crassies and rules and regulations. it is run by their own board as opposed to the school board. i think the problem in a lot of the debates in public education today is that people want to

frame things on one side of the extreme or the other. charter schools are the answer to all of the ills or charter schools are terrible. fact of the matter is that we don't want to paint all children or teachers with the same broad brush strokes, you can't paint charter schools like that. there are unbelievable charter schools in this country who are at scale doing what a tradition public school district have never been able to do, insuring that poor minority children are achieving at the highest levels. they are closing the achievement gap that exists in this country between white and black kid it is and poor and rich kids. also in this country there are extraordinarily bad charter schools. the problem we face now is that we have not been diligent about closing down poor performing charter schools. the whole notion behind charter

schools is higher degree of authority for higher degree of accountability. we have given them the authority but we don't have the accountability side meaning if you are not performing we will close you down. that is part of the problem existing right now. i think that people that want to say well, on average this and that, that blurs the point. the point is that there are amazing charter schools in this country that figured out how to do it and do it extraordinarily well. and we cannot mask the incredible results that they have seen simply because there are poor performing ones. we ought to be shutting down the poor performing ones and giving the high performing ones more resources so go to scale and serve more kids. >> i think my answer is simple. comp stigs a good thing. we don't want our school

districts to run unchallenged. when you create an environment where it is competitive, everybody starts to get better and the try harder. those that do well will attract more kids. those that do not will have less kids in terms of enroll. in california you have a u-shape. you have really bad charters here and most of the charters and some really great charters. there is a u-shaped curve in california. a lot of bad ones. this is the regular schools. and the high-performing, totally outspike the other schools. so the challenge for us in california and anywhere, we have 952 charters in california. the bad ones, you have to close down. you cannot let them continue to go on. if you do that all we would be talking about is the high-performing charter schools. i will give you an example.

our elementary school 95% african-american kids in the school in a poor neighborhood. 95%. it has the third highest test scores in the whole city. what are we doing there? how do we even get the opportunity to run this school? we got the opportunity to run it as a charter because the school district said we don't know how to educate black boys that are poor. we are being honest. can you do it. we felt that don't kids need good teachers and high expectations? don't they need longer school days if they are further behind? don't you need data to determine whether kids are learning and teachers are teaching. it is not rocket science or a silver bullet. she finishes most of my sentences. we created a different environment in this community. now this school, michelle

talked about closing the achievement gap. this school has a reverse gap. minority kids in this community are outperforming the white kids in the whole city. here is the one thing that would seal it for you folks who are not aware. if you go to our kirned garden classroom it would say class of 2027. the year they are graduating from college. you cannot tell these kids, even though their parents and grandparents and great grandparents never went to college, they have probably visited the clinton school more times than i have. they take college field trips every two or three weeks. when you create that environment of high expectations and remove the things you don't have in school districts you will get a different outcome. that is what we want. we want autoonmy and the

accountability. that is whatnot you see happening in most school districts around the country. our schools ask teachers work longer school days. in a school district, they can't work a longer day. grievance or whatever. they would file a grievance if you asked them to stay an extra few minutes after school. anyway, i am done. >> when you are out there in the public arena as both of you are, and you take strong stands and controversial stands you face criticism. that is true of anybody. michelle, you came under criticism about what people alleged about your performance as a teacher. i just wanted to ask you about that and give you the opportunity to respond. >> hold on before she does that. you have to tell them about

your mom and just your personality for criticism. then you can justify your test scores. >> my first year on the job in d.c. i made the decision in the first 100 days or so that i would close 23 schools in the district, 15% of the total schools in the inventory. if you quickly want to become the least popular person in the city all you have to do is tell someone you are closing a school, much less 23 schools. my mother was visiting. she woke up and opened the "washington post." a two-page spread pinpointing all of the schools i was closing. she turned on the tv. there were pictures of people picketing outside my office and screaming at me and that sort of thing. i got home that night and i walked in the door and she said

are you ok. i said yeah, i am fine. she said when you were little you never used to care about what people thought about you. i always thought you would grow up to be anti-social. but i see now this is serving you well. and i said yes. it is interesting too because in the middle of my tenure there was a columnist at the "washington post" who wrote a piece about me saying that i like michelle. she is doing all of the right things. we are seeing really good results. i just wish she would be nicer. so i read the piece and said what is this all about. he is like here is the thing. i feel if you were a little nicer than you could stay longer. staying longer is a good thing. can't you just be a little nicer. i said you need to figure out what you believe the most

important characteristics of a school's chancellor are. if you think it is being nice and friendly and accommodating you should actually be advocating for my ousting. if you want warm and fuzzy, i am not your girl. if you like the results and think we are heading in the right direction you should advocate for us as adults to put the personalities aside and actually focus on what will work for the kids. let's stop what we are doing right now, turning a blind eye to what is happen to kids every day in classrooms in the name of harmony amongst adults. if we are causing controversy and making the adults uncomfortable, but the kids are better off, that is what we need to be focused on. test scores, yes. thank goodness, yes.

so about 20 years ago, i taught elementary school in baltimore, maryland. taught for three years. my second and third year of teaching i was fortunate enough to loop with a group of students so i had some of them in the second grade and the third grade. at the end of that third year as i headed off to graduate school my principal called me to say the kids knocked the test out of the park. of the children that you happened to have had in both the second and the third grade, where they started out with extraordinarily low test scores, now 90% of them are scoring in the 90th percentile or above. i thought that was great. put it on my resume. little did i know 20 years later i would become a public official. people were combing my resume.

they say here is some statistics about how her kids did. they wanted to know do you have the proof. back then we did not have proof of that type of stuff. they called my principal in to testify in front of the city council saying did you tell her that is the case. my principal said yes. they said do you have any proof. no. this is what we both remembered. about a few weeks ago somebody found an old study that was done on a group of schools in baltimore. they said this shows that michelle is lying because they pulled up the data for my school and looked at all of the children in the second and third grade and not just the kids in my school. they said that group of kids saw growth but not in the 90th

percentile or above. what was the case is that they were looking at the entire grade of kids, not just the kids in my class. baltimore said there is no way to choose the exact kids in my class. what is actually visible is the fact that the group of children that went through the second and third grades out of all of the schools in the treatment group and in the control group, the kids that we taught out our schools started out with the lowest test scores as second graders and ended up as the highest scores in reading and math. the highest test scores. even though we can't pull the individual kids to show that, the kids, some of the kids that were in my classroom saw

absolutely unbelievable gains. but this, from a public policy perspective, is one of the reasons why it is so important where we are now in being able to give teachers information, student by student information and the reports back about how much their kids are growing or not so it is not left to speculation and people's memory from 20 years ago that you have the evidence right in front of you of whether or not you are moving the student achievement levels for the kids in your class. >> in california we have 300,000 teachers. we don't use data in california to determine whether or not teachers are teaching effectively. if you look at the top 10% of the teachers, and look at the bottom 10%, 30,000 teachers, you can't tell who is who in california. what you would want is your top teachers to mentor your bottom teachers to hopefully develop

them. but we don't allow data to be used that way in california. that is why california is one of the worst performing states. our belief is that you have to look at data. test scores are not an end all. you don't evaluate every teacher on test scores but there has to be some mechanism to determine whether or not kids are learning and a host of other ways to evaluate a teacher's effectiveness. >> good discussion. now it is your turn. those with questions, please raise your hands and then i will ask a microphone to be brought to you. >> thank you so much for being here. my question is about parents. you talked a lot about teachers and holding them accountable and giving them resources. i know a few teachers in d.c. despite their efforts,

sometimes they would have students that would fail. a lot of the challenges that they ran into was the parents. my question is where do you see the role of parents changing with these new initiatives? >> i think that it is very clear. i don't think anybody would argue with you that we need more parental involvement. we need parents to be engaged and when parents are engaged that student learning will increase. anything that school districts can do that individual teachers can do to encourage parents to come into the schools and to be involved is of critical importance. i think that my worry is often that a lot of times in the education reform debate people say, well, the reason why kids in the poorer inner cities are not doing well is because their parents are not involved. there is a blame game going on.

and i think that is extraordinarily problematic because we have just in the last few months in this country seen very, very stark examples of parents who have been trying to be very involved in their kids' educations. if you saw the movie "waiting for superman" thousands and thousands of parents across the country desperate to get their children into a decent school out of their failing neighborhood school. they are doing everything they can to make it happen. you had a group of parents in cofmenton, california, who were the first parents to decide to use a new law that the mayor actually helped put forth which means that if 51% of the parents signed a petition they could force the restructuring of a school. and the last example is a

mother in akron, ohio, who decided that she had to falsify her residencey documents so that her kids could go to a safer, higher performing school. three examples of parents that are trying to get involved. look what happened with each groups. in the first case we say sorry. i know you want your kids to be in a great school but no room here. the second group of parents were threatened with deportation and harrassment and everything else because of the decision they made to pull the trigger. the third lady was thrown in jail. so i don't think we are communicating to parents that we want them to be involved. i think what we are communicating is that we would like to continue to blame you we are better off with you not fanatic involved. we can't dictate how parents will be involved. we can't be mad when parents do get involved because we don't

like the way they have chosen to do it. that is what we are trying to do through students first. we are going to radicalize the moms of america and the education system better watch out. you better be ready to deliver. >> let me follow up on that parent trigger which passed in california with 51%. do you see that as part of a national movement? >> absolutely. it is already spread into half dozen other states. it takes the power and gives it to the parents. parents should be able to demand a very good education for their children and oftentimes that is not the case. california started it. parent revolution, unfortunately in california there is a group of people talking about repealing it already because they don't want parents to have the power.

the role of the media plays a critical role too. this is for the grad students here too. the role of the media plays a critical role. our editorial board is hammering away at everybody opposing parent trigger. why would you not want parents to have the right like rich, affluent parents do. if you can't find a good neighborhood you move into another community. if not you will figure out how to use somebody else's address to make sure they go into a good school. our kids are trapped in bad schools. it levels the playing field and it is spreading around the country. >> right here, yes. hold on just a minute.

>> i am in my second year and also a current student at the college of public health here as well. your goal is to change the social environments within the schools. and we talk a lot about the determining the health which includes all social environments, in the school and surrounding the school. so, i wanted to know where does community development fit into your plan and who do you see influencing that so that the community builds up as the schools are reformed? >> who are you asking that question to? so, you have heard of the harlem's children zone. exactly what huare talking about. president obama has the promise

neighborhood initiative where you are creating the environment where the schools are the center of communities. everything around it plays a role. in sacramento michelle and i met many years ago. i have an organization called st. hope. its mission is to revitalize inner city communities through economic development, civic leadership, public education and the arts. i grew up in a poor neighborhood. so i knew that schoolings were very important. but i don't believe you can improve public education without economic development being a part of the equation. if you can't figure out a way to create jobs and train people for the workforce, figure out how to get your dollars invested to circulate within a community it will be very difficult. we want to revitalize a community, public education and economic development go hand-in-hand in that.

>> you have to tell your starbucks story really quick. >> i will tell that at the end. >> i am an election commissioner. would you address voter apathy? and in arkansas school elections are held in the odd years. so this is not tied in to who is running for governor and president. as an election commissioner i think school elections are the most important elections. but apathy in my county, 80% voter registration. during a school election i have seen as few as 19 people vote. that is ridiculous. would you address that please? >> i alluded to this earlier, it is part of the reason why the school board govern nantz structure is so problematic.

oftentimes they are low turn out elections. you are talking about a very, very small number of people making the determinations about who is on the school board meaning that not a lot of money from teacher's unions could influence those elections. and the reason why that is problematic in a lot of ways is that if you look in the vast majority of states across the country the policies that govern staffing of schools and who teaches which kids and win, et cetera, are determined through the collective bargaining process. when you have a slate of school board members who are elected through union dollars then you essentially have the union on both sides of the bargaining table, right? if the union got me elected i am not going to go hardcore after the union for a better contract. i am relying on them to get

reelected next time. that is problematic. we have to find a way to get the public more engaged in public education. you have got to know when your school board elections are and know exactly what those people stand for and who they are going to stand for when it comes to actually running the school district. >> right in the front row. >> hi. i currently serve in the city here. my question is this. programs like city and teach for america often recruit from a select group of students. how do we make sure that all groups of students can serve their country? >> first of all, i love city year. >> how about that for an endorsement. >> city year was a huge

component of our success in washington, d.c. when i first got to the city i went to a city year opening ceremonies, and got to see all of the excitement. i came back and said i have an idea. i want a city year member in every one of my schools. they said that is interesting. but we have a better idea. basically they said we have a new program they wanted to start. the program which clustered groups of city year core members in individual failing schools to help to turn around the culture and the environment. if we had 10-12 members all clustered together that would really help to change the culture of the school. we started that in d.c. they were there early in the morning and late at night.

they were tutoring in the day and running the after school programs. it was unbelievable. and one of the things that i found to be the most heartening, was that the young people who had exposure to the city year folks aspired to be like them. so ultimately we had people who were becoming core members. that is the ideal scenario. where young kids have expose tower city year. they see the power that individual young folks can have on people like them and they want to go back to their community through the same types of programs. >> yes, ma'am, right here. >> i just wanted to thank you guys first for identifying the problems. identifying the solutions. and then enacting those solutions so that we can see

how we can make a difference. i truly wanted to applaud you on that. my question is to the mayor. we had a recent school board issue in the little rock school district where our superintendent was pushed out. there was a buy out. i happened to be one of the leaders of the community. . students are achieving better. i reached that to the mayor of little rock. but is quite disappointing. the officials are more and fault. we want to improve our economic standards. the cannot do that greater education.

our answers are pretty brisk. have to be involved. if he did not hear from them, i'm going to say we did not try hard enough. mark is a very committed person. osha would have known consumer. think about little rock? you guys have the richest history in the history. to hear one of the speech. she is an amusing lady. just listening to her stories.

i have been in little rock a dozen times. i to sit there. there are images and pictures. now my responsibility is to do their job. it is important to know that you think that result would be enough.

she entered washington, d.c., the worst school district in the country. turned it around in three years and had the biggest gains out of any urban school district in the country. >> was here from an electric figure. from a figure. >> they have a panel discussion.

adrian finney was york mayor. they did not survive the election. it was bad. i have three grandchildren. i just want to applaud the all -- applied you all. you see were kits -- you see where parents are committed to their children. yet you have 300 vacancies. and there are 20 or 30 spot. the lottery is what selected those children. we cannot wait.

it is the day before yesterday about how we are 18th and 19th. thank you for being a part of it. >> thank you so much. they have participated in a panel discussion had a couple of days ago.

they have an unbelievable ability of taking issues that are available but not mainstream. this is what happens with al gore and the "inconvenient truth. he took a complicated issue and made mainstream. anybody in here can get the dvd. amid the things they are encouraging folks to do is have a viewing party at their home. watch this movie. the power will take you off. you will be ready to join her organization immediately. it is about best fighting

together. it is a tragedy. distributed. -- that part is being distributed. >> of that part is the competing when it comes to our education system versus others. testing what the mass skills were. this is what they are asking within nation.

there are building this bill so they are good that stuff. and my own household at two little girls, aged 8 and 812. they both play soccer. they sat at soccer. -- daisy suck at soccer. if you walk into their rooms, if you will see medals and trophies. you think i am raising the next mia hamm. it is difficult. and what to tell them that you are not so good. we have to practice every single day. even if you do that, i cannot guarantee you that you will be great. it is hard for them to reconcile that with all the trophies and medals. we have to regain our competitive spirit in a medical -- spirit in america.

you have to work hard. we have to stop allowing the children of our country to be proud of mediocrity. that is the only way. [applause] >> thank you. in a school like this -- what

does a teacher of the quite? how do you measure that? the talk about results. how you evaluate this teachers? >> i think that it is important to note that a teacher who is a great teacher for a black kid is not all that different for a teacher who is a great teacher for a white kid or an asian kid. great teachers said very high expectations for children. they do not let children be stupid. they tell them to the expectations. the thing that used to make me so mad was when children and

tell me stories of adults who were in the school and went say things like i get paid whether you are learning are not so what does it matter? if he had a high expectations, each child is an individual. it makes things a great teacher. there is no equivocation and that what matters to them as

having a great teacher in the classroom every day. they know when somebody pays for them. cracblack sea have to believe yr kids can learn. that is the most important thing. that kid will do anything for that kid. if the teacher raises the bar higher, at the kit will find a way to get there. that meaningful relationship is still critical. that is what we do not have. these teachers see a goal.

they figure out there is a problem. the kid does not come to school. the goals to be there 95% of the time. 11 our kids did not have to parents to help them. or parents who know how to do algebra. backache and called the teacher if that children is available -- so that students can call the teacher if that children is available. the the job does not stop when they leave the house.

it is tiring. they are great. they find a way to make it happen. >> i was at the front. >> thank you for coming. i have been here. my question is about how we would incorporate the arctic and thus will district. there is low and thises and other things that enhance the learning.

>> arts and p e in all those things are equally important. the mayor i believe the first thing would be the arts program. we do not learn the same way. they can learn how math connects the dots by looking at art and things like that. this is a pilot program called "any given child."

the down economy has less resources. they know the value. a tennis goes up. thirdly, these young people become future patrons of the arts. everybody wins. have to make sure i do my job to make sure that parts are essential in a young person's education. what the chancellor did was amazing. >> it was interesting. they were facing a huge budget deficits. it is about $700 million so far.

everyone was trying to speculate. my boss decided they are not want to touch the school's budget. people went nuts. these goals make up a huge percentage. they have to shoulder their fair share of the budget. we are there because of the irresponsibility. we are not one to make up of this. only 20% at school age kids. part of the reason why is because what we manage to do was we have the exact same amount of money but had your schools to spread it over. that meant every school is able

to have an art teacher, librarian, etc. it will not be dependent on what did you are a wealthy school and you can hold an auction to raise money. every child in the city must have access to a broad based curriculum. every single child should have access. >> there was a student that asked about holistic education. she wanted me to tell the story quickly. if you are aware, it is black history month. such a small audience. in our community, we were trying to get a copy house to come in.

i call magic johnson at the time. i called him up and said, in los angeles, you run a starbucks. how did you do it? he said i pulled the pc e o of starbucks -- i pulled up the ceo of starbucks. this is magic for real. i used to love your at michigan state. he said i have another call.

can i call you back? you are just so charismatic. you got big feet. i need a starbucks in l.a.. can i tell you something about the record? of course. i am telling you of the record. he said i have my team when the ability. the demographic and the profile is the community that you want me to go to. as he said, give me a little more. but people do not drink coffee.

-- black people do not drink coffee. i appreciate the honesty. is called the magic johnson sony theater. they like reason that -- they like raisinets. if you want to do a wager, let's find out what they are black people drink coffee to get there. because $1 million to do this. i will put up 500. you have to put up 500. we will find out together whether black people drink coffee. we thought about it. one other thing.

i will work on the business operation aspect of this. this isn't area you are more familiar. you guys know the coffee margin is not little. it is big appeared to become a starbucks store takes four years to get a full return on the investment. the store six months. magic get a car six months later appeared at the news and bad news. the good news is we got that back in six months. he said black people drink coffee. we are going to open up 27 more starbucks around the country. what is the moral? people in every neighborhood want the same thing that

everybody else wants. they want good schools, safe streets, teachers. ps of black people want coffee, at 2. -- yes, black people want coffee, too. >> we talked about the art. thea foundation. it is a marvelous organization. k them.nhan [applause]

>> i am a numbers guy. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] he expresses his opinions using graphs. >> i really do search for data. it agrees with an opinion that i have. >> to descending night at 8:00 on c-span. >> in a few moments, hillary clinton with an early evening update on the situation in libya. in 10 minutes,, ownership. a panel of experts from the future of fannie mae and freddie mac. >> house and senate members have

been extending a working week. >> secretary of state clinton spoke with reporters for 80 minutes this evening about the situation in libya. this is a little less than 10 minutes. >> >> i am just returning from the

white house where i met the president and a team. i want to give you an update on the international community's effort to implement security council resolutions and protect the civilians of libya. events have moved quickly. that be clear about where we stand and how we got here. the libyan people thought to realize their democratic aspirations. they were met by extreme violence from their own government. the people appealed to the word -- world. the world listens. the arab league called for urgent action. the u.s. security council mandate did all necessary measures to protect civilians including a no-fly zone.

lest we can they reached it. they faced a prospect of a humanitarian disaster. hundreds of thousands of civilians were in danger. an international coalition was compelled to act. they were the first to reach these guys. they are striking the regions. it cleared the way for allied aircraft to implement the no-fly zone. many other nations have now joined those efforts. after only five days, we have made significant progress. they have been rendered largely ineffective.

humanitarian relief is beginning to reach the people who need it. just today, we learned that at least 18 doctors and nurses from an organization funded by the united states agency for international development had arrived and were beginning to provide support to the main hospital. the troops have been pushed back. they remain a serious threat to the safety of the people. we are creating the conditions for the no-fly zone and to exist in meetings. as expected, we are seeing a

significant reduction in the number of u.s. planes involved in operations as a number of planes some other countries increase in numbers. we are taking the next step. we have agreed to transition command and control for the no- fly zone. all 28 allies had now authorized military authorities to develop a plan for nature to take on the broader mission under resolution 19. they are well suited the international effort. we expect all of them to be

providing political guidance going forward. they have joined the discussion. they announce their joined the coalition and sending planes to help protect libyan civilians and enforce the no-fly zone. we welcome this important step. it underscores the bret of this coalition and the depth of concern in the region. in the days ahead, the welfare of those civilians will be of

paramount concern. this operation has already saved many lives. the danger is far from over. as long as they threaten the people and defies the united nations, we must remain vigilant in focus. to continue coordinating with their partners and charting the way for work, i will travel to london to attend an international conference on tuesday. our military will continue to provide support to our efforts. they will make sure the resolution 1970 and 1973 will be in force. they have other birds that have garnered support and active participation to recognize the significance of coming together

through the united nations and the show include the statement hud in order to protect innocent civilians. it is and pepper to we believe this very important and will look for record and meeting closely with all the nations that are participating. >> in a few moments, comments from vice president biden's

economic adviser. in an hour, a panel of experts on the future of lenders fannie mae and freddie mac. after that, a speech by henry. a couple of live events to tell you about tomorrow morning. they host a discussion comparing japan's nuclear situation with what has happened at the nuclear power plant in russia and chernobyl. after that, we will be live on c-span3 with the committee health centers. the administrator of the service administration, the primary agency addressing health care for the uninsured. >> haley barbour, newt gingrich

at the conservative principles conference. this weekend on c-span. >> of the next several hours, a form on the future of hong ownership posted by the atlantic magazine and beat edmonton journal. later you hear from henry cisneros. first, vice president by den's economic adviser. >> thank you very much. this is a great subject. before our interview, let me introduce my partner in these affairs. tom has joined allstate in 1995.

he serves as vice chairman of the chicago federal reserve. we have been fortunate enough to do a number of partnerships over the last eight years. this one will last, too. we are interested in partnering with them. many of you have been touched by all states in your lifetime. we welcome your partnership.

>> good morning. thank you are coming and joining us. we are glad you are here to share some thoughts. he is the economic policy advisor. it has been two years here it our goal has been to give the american middle-class a voice above the political rhetoric. it is ahead of what needs to be done in america. we have a great team work. we've been able to raise a lot of issues. these provide a very interesting materials. there are several very interesting themes that i think show up.

americans are optimistic. they believe in self- determination. believe in the american dream is alive and well. this is a generation swamped with having a hard time getting a job. they are still optimistic that they can live the american dream. we saw it in this poll. it is achievable. what is interesting is that home ownership remains a critical part of that dream. 73% of the people are saying that it help them achieve the american dream. and our proposal, and they said a number of things. they said this was different.

they are spending less. 27% of americans are under water on their homes. their mortgages are worth more than their homes harry 70% of americans would recommend this. 89% would make the same decision to buy a house they owned one. what do people know? it makes sense. the underlying demand for housing has not changed. it is still part of the american dream. if you have an underlying demand, it is worse in some states.

given a temporary supply and demand. what about the studies that show owning a home is not a good deal? by a margin in this poll, people would prefer to own a house than to buy a stock. what they do not capture is the number-one rule of investing, which is by what you know. to not buy what you do not know. as a consumer, you can know your real estate market. he can know your neighbors better than you can know what stock to pick. there is less downside. you can always live in it. a number of people said they wanted to buy for financial reasons.

it is where my family comes. at in a memories here. some returns come in dollars. americans are willing to invest the money. there is always a savings component to buying a house which helps people. while lots of economic wealth has been wiped out, most people are in the money or close to being in the money on their house. of the people under water, and about 10% of homeowners are really under water. they make up about 450 billion. everybody else is reasonably close. a couple years of inflation should be able to bring you back. if the what to get out of the

house, you have to pay somewhere between 5% and 6% commission. if you default, the costs are even higher. it makes perfect sense. it is why americans are staying in their homes. demand continues to be strong. what we have is a housing oversupply that is temporary. most consumers today is not if they should pay -- by a house bill when. i said it is temporary. it is not permanent. permanent is a long time. nobody really knows how long it will take to work through this bubble.

particularly some of these states have been harder hit. he did not see a number of people rushing in to buy it even though there is that demand. there is about two years weren't a supplier on the marketplace if you add on homes that over 90 days delinquent. is plenty of opportunity to buy. there is plenty of stuff available. there is a lot of uncertainty in america. consumers are concerned about their job. there is an uncertainty of will i still have a job. they are spending less money. there is uncertainty over the direction of prices. wiseguys today if you think the

price will go down 5% or 10 cents? there is no incentive to buy. some of this is due to the economic problems. average income has been flat for over a decade. if average incomes do not go up, it will not drive prices. it is better today than it has been in the last four or five years. it is about average. housing costs is actually cheaper than building a house today in many markets. nobody can predict exactly how long it will take. i do believe this is a temporary shift.

the underlying demand has not changed. let's shift our focus to dress in the role of government and business. we continue to see that business and government is not trusted. americans want people to work together. this is out. one of the interesting thing >> is that of a lack of belief in what is helping them. there is this chest's deficit. it is growing faster.

changes, it won't matter how much money we're in debt because people won't believe in our system. you also see, what's interesting in this poll, is they don't see that the policies being enacted are benefiting them. so as it relates to housing, as ed talked about, over three-quarters of them don't believe they benefited in a government policy which is amazing to me. 70% of the people who get a mortgage deduction don't think -- now, some people would say, well, not that many people pay taxes, but still 70% of the people who get a deduction don't believe it's a value which is consistent with our other polls. in i think it was our fourth poll, only two-thirds of americans did not believe that the policies being enacted were going top of help to them. they thought that the things people were working on was not what they were interested in, it was basically to help the

special interests and the rich people, and i think you continue to see that as it relates here. this poll, of course, shows that the current programs aren't valued, or at least you could ask the question whether they'd be valued if they go away. sometimes absence makes the heart grow fonder. you also see the country about evenly split between whether we should continue to support it or not. so americans believe they're doing their part. this concept of self-definitely self-definitely -- self-determination, i can make it happen, i'm saving more money, they just don't feel that the government and business are reciprocating, so they're really pleading, please, get your act together, focus on the things that we're focused on which are jobs, primary and secondary education and the economic competitiveness of america. so met me close with just -- let me close with just a request of you. you know, two years later what have these voices told us? they've told us that americans are optimistic, that they are not naive, that they know that

there are tough decisions that have to be made, significant sacrifices lie ahead. they are willing to work hard to make compromises to make america stronger. and what they are demanding is that we as leaders do the same. so i want to go back to the purpose here of what the heartland monitor was which was to let their voices be heard, and i have the opportunity and the privilege to be a leader of what's a great american company. with that privilege comes a responsibility, a responsibility to speak out and let other people's voices be heard. that's what we're trying to do with this poll. everybody in this room is also a leader in your own way. some people are thought leaders, leaders from organizations, you have people who read your writing, who follow what you do. as leaders we need you to step up and let their voices be heard as well because if we don't eliminate the trust deficit, we will never get the economy back on pace, and we won't be able to help all these people achieve the american dream. so thank you very much, have a

great morning. [applause] >> good morning. i'm the economics correspondent for national journal. thank you so much for joining us and for what i hope will be a really lively and interesting discussion today, but that's mostly up to jade, not to me -- jared, not to me. i'd like to introduce jared bernstein, he's the chief economist and economic adviser for vice president biden, the executive directer of the vice president's middle class task force which has done a lot of work, deep dives on questions of employment, the economy and this whole idea of what it means to be middle class. this has been jared's work for a long time, sort of a running

theme of his distinguished economic career which includes stints prolific book writing and op-ed writing. i can also tell you he owns one of the less mediocre jump shots of the entire obama administration. [laughter] so thank you for joining us and, jared, let's just start with kind of can you give us an overview? what's going on with housing now? >> first of all, there are many basketball players in this administration who are much, much better than me, so let's just correct that for the record. i played with the president a couple times, and he can get around me with absolutely no problem. but he's a lot younger than i am. i would say, so i'm just going to speak broadly, as jim asked, for a few minutes, and then we'll have a discussion, and i know we're going to have time for your questions as well. of all the issues i deal with at the white house, homeownership is one that evokes some of the

strongest emotions, and i think you can, you can feel some of that this morning. if you read, i thought, the very readable supplement that the national journal did on this issue. obviously, unemployment does, too, but they're intimately related. a primary cause of the great recession and the elevated unemployment rate was the housing bubble, a massive asset bubble inflated by a massive failure of the system of housing finance, both private and public. and yet if you read the supplement, the national journal supplement, you get a strong sense, and i heard in some of tom's comments and others a very strong sense that there's more than dollar and cents underwriting, securitization, gses, etc. feeding this question of the role of home homeownership in te economy and in the lives of americans. there are strong emotions at play here too. and i think if you want to bring the best policy thinking to the issue, you'd better take these feelings and sentiments into

account. you've got to use your brain and your heart to think this one through. let me be a little bit self-referential. for years i was a single, mobile person living in expensive housing markets in the northeast, and i did the economics and concluded that representing was a much better deal. renting was a much better deal. and even after the wife and kids showed up, i still argued for renting. i should disclose that our children came around about the same time the economist, dean baker, started showing me graphs of home prices diverging sharply from rentals and from middle class incomes, that is as the bubble was inflating. but both my wife and our accountant who happens to be my wife's sister, so i'm not sure that qualifies as an independent view -- [laughter] were pushing for homeownership, and now we live in this lovely, leaky, somewhat funky house on a cul-de-sac. and, in fact, i had the somewhat peculiar experience of writing these comments last night while i was running downstairs putting

buckets underneath leaks. [laughter] kind of forcing you to think about homeownership in a very personal wayment but in recent days with -- way. but in recent days with spring in the air, i can sometimes get home from my white house job when it's light enough to see all the kids playing in the cul-de-sac. i've got the old cat sleeping on the porch, and i get a beer, and i sit out there and watch the kids play. full disclosure, i'm checking my blackberry every five seconds, but you get the picture, and it's a nice picture. at the same time, i work for a government that's supporting about 90% of all home loans, and nobody believes that good. the housing market remains fragile if anything is, quote, bumping along the bottom as a goldman sachs research note mentioned the other day. and it was a classic market failure firing on just about every cylinder. top officials egged on by dense

in both senses of the word argued that government regulation was unnecessary because the markets would self-correct. potential homeowners signed on to deals that only made sense if they suspended belief in the law of gravity, at least as it applied to home prices. and, of course, they were egged on by shoddy underwriting working with securitizers who had little reason under an originate to distribute model to worry about loan quality. and as we forthrightly stress in our white paper on gse reform, fannie and freddie got into the game too, late in the game more chasing the market down than up, but no one's blameless in this drama. so i guess my simple point is that there are a lot of sides to this question of housing. i don't question at all that it's a piece of the american dream, but that dream cannot come true if homeownership is unsustainable. as my colleague on our housing team, jim parrot, says homeownership can be a ladder

into the middle class. done badly, it can be a slide out of it. so like many in this room, we've been thinking about how to do it right considering owning and renting, the structure of housing finance, the role of the federal government. we don't have all the answers, and we'll keep working with policymakers of all stripes to find the best policy architecture to support affordable housing options, liquid mortgage market consistent with prudent pricing of risk and protections for taxpayers and consumers. and once we get that figured out, you're all invited over for a beer on my front porch. [laughter] jim, over to you. >> okay. so let's start, you touched on a lot that i want to dive into, i but let's start with the issue of the market and the recovery. >> sure. >> the recovery is not bumping along the bottom, it's starting to pick up maybe here, but housing remains, clearly, the dangerous drag. >> >> yeah. >> how bad is the market, and how much is it holding back recovery? >> um, i was able to come up with a couple of slides that i

think show, shed some light on that. i think the answer to your question is that while the housing market was -- the bubble and the ensuing bust and the market itself was, obviously, a key factor leading us into a very deep and lengthy recession, at point house -- at this point housing is not bringing the macro economy down, but neither is it lifting it up. if you look at this slide, and, yeah, okay. you guys can -- i see it here. yeah, there's screens over there. if you look at this slide -- i'm color blind, but i think it's the red line. this is housing's contribution to the growth in gdp. and you can see that huge gap as

housing investment tanked, became a huge negative, led the economy into recession. and the blue line, the other line is gdp growth, and you can see how deep that was. but as jim pointed out, gdp's now been growing for about six quarters at an average rate of 3%. employment which, of course, was a huge negative in the private sector has now been growing for 12 months, 1.5 million jobs. and what you can see is housing, the contribution of housing to gdp growth in this slide is about zero. so it went from being a huge negative to being a zero. now, if you look back on the earlier numbers in the expansion of the 2000s, you see it was an important contributor. so certainly housing investment is not contributing to economic growth, and often coming out of a deep recession that's precisely what you want to see. you want to see that contribution, and we're not seeing that. so i'm not saying that it's, that we're out of the woods and everything's all better, but i am saying what was a negative in this case is more of a zero.

one more slide on this, and then i'll get to your next question. one of the reasons that's true is actually an interesting point that is somewhat underappreciated. this slide shows residential investment, so that same factor we were looking at in the last slide in its contribution to gdp. .. finish

>> gdp is one metric but it's the job as a metric because voters judge the president on. there may be housing impacts on the job market that are too showing up in gdp, for example, a lack of mobility for people if they can't get out of their homes, have problems not being able to create new construction jobs. how much are you worried about this sort of employment effects right now? >> i worry about everything everyday, so people ask how much i worry about stuff like this, the answer is a lot. because unemployment is way too high and job growth while positive, is too slow. there's a lot of feedback in the dynamic relationship you just described. it's obviously a lot harder for people to service their mortgage debt if their employment situation is less secure, if

their wages are not rising in face. and particularly of course if they are unemployed. in fact, part of our modification program targets the unemployed and the long-term unemployed in particular. so i think there's feedback both ways. i just happen to have another slide on the. this is from a bureau of labor statistics paper that just kind of looked at all the different jobs associated with employment -- i'm sorry, associate with real estate including construction but also including financing and real estate. and you can see, not only just a huge loss there through the fourth quarter, i think these are quarterly numbers. fourth quarter of 2010, but you also see a you are talking about seven, 8 million jobs. this is out of a private sector job market of 110 million jobs or so. this is a big sector. it definitely weighs on our concerns. that's one of the reasons why you are happy to see the talks

in getting out of the system and correction is well underway. the fact that you're bumping along the bottom more than your increasing and contributing is still problematic. at the same time we do have a consistent trend up in private sector employment. that's a positive. but when you make your list with the things you worry about, today's economy, state and local budget cuts obviously, things that are going on in other parts of the globe, the housing market is on the list speak up when you talk about housing market and unemployment and how they are related, one of the problems is you don't have a job, you can't pay your mortgage. the foreclosure property is holding back the clearing of the market. as we look at that, are you doing enough to attack the root of all that which is the employment problem? have the present and have your policies done enough? >> i think so.

let me start with another picture just because i think it's interesting and links up directly to what you're talking about. this plot foreclosures against private sector employment, both are indexed to a hundred and 2007. i can see and i can't see colors but otherwise i'm fine. [laughter] and what you can see here is, this is well known, but certainly the decline in employment was arrested starting back in january of 2009. we began to see more consistent -- january 2010 we start to see more consistent employment growth. while foreclosures kept tracking of. as i mentioned 1.5 million jobs over the past 12 months. that's not enough. the unemployment rate at 8.5% is way too high, but it's come down considerably over the last few months.

i would argue that the president agenda, one that is probably very important to our office as well as the vice president, has been integral to offsetting some, not all, offsetting some of the damage of the greatest recession of our lifetimes. in particular the job market, we were losing 750,000 jobs a month when we came into office. and if you look at come if you simply plot out the trajectory in jobs, against policies that were targeting those problems you actually can see some good traction. i understand that the recovery act has taken a lot of negatives in the media, you know, in various analyses, but i have no doubt that that stimulus

accomplished what it set out to do. including the saving are creating a three and a half million jobs, which is by no means a trivial a congressman, and very much in tandem with help by the federal reserve and housing problems we can talk about, part of this problem. but i think what you have to realize is that the recession that greeted us and i described in my opening comments was far greater in any conceivable stimulus or housing relief program could fully offset. have our measures are rest of the downfall and create the conditions for growth and the private sector economy? absolutely. you can see some of that happening. but the damage was immense, and it's taken time to correct? >> one of the critiques was you put in place things like the homebuyer tax credit which is now expired. is that they have in cushioning the blow may postpone a little bit the clearing of the market.

how fair is that criticism? >> i don't think -- there's something to the budget i don't think that's a fair critique. if you think that a reasonable policy for an administration in the midst of the greatest recession since the great depression that had at its root a housing bubble inflated by a financial mess, if you think that the policy solution to that was to just kind of, what was the name of the guy that created the construction guy? if you think this was a moment for schumpeter to liquidate, liquidate, liquidate, i guess that's over. who for schumpeter.

i think that's completely wrong. i think to have done that would have squandered hugely valuable resources, not least of which in terms of output and jobs, but also in terms of people's homes. but i think it has to be a balance. if you go into this thinking, if you go into your policies thinking that every single potential foreclosure must be stopped, then absolutely you will prevent the market from carving out a bottom. but if you implement a set of policies that are targeted to the middle class or trying to figure out who are the people that with a loan modification can get out of this very deep and unfortunate bubble, and must situation, you try to give them the time to get back on their feet so that they can sustain their mortgages, and i think you

are ultimately creating a floor on the housing market and the economy that is critically important keeping things are getting a whole lot worse than they got speak are like to get back to our poll. 46% of americans say they support what the government is doing to promote homeownership. 46% say the policy go too far and cost too much. simple question, which side is the administration on? >> i actually think that we answer that question in our white paper that we did on gse reforms. and what we said is that there is a role for government in the housing market. we come up at the end of the paper with three options, a very targeted role to the low or

moderate end of the market through the federal housing administration, that plus a backstop in case of an emergency. and a somewhat larger role involving reinsurance and backstop, broader backstop of the market. those are three options are so in answer to question, every one of those options have some role for government. but the theme throughout the paper and particularly targeting fannie and freddie and the absolute necessity to wind down the gses is that governments role in the housing market was part of the problem. and got way out of hand, and that needs to be corrected. now, in our view one of the most important parts of that correction, putting that roll back into its proper size in

perspective is the winding down of the gses. that's going to take some time because as i mentioned in my comments, it's the gses and the fha, the veterans, all the different housing policies are supporting over 90% of current loans because private market has just been on the side for a while now. that's going to start come back. as that comes back we have to pull it down. so, i think it's actually very instructive that the poll shows it is sort of a half and half thing because i both right. there is a role for government that's got to be one that supports sustainable homeownership, not the kind we had. i will say one thing about this, that may be a somewhat underappreciated. the role for the government in the housing market is by no means simply housing policy at hud. it has a lot to do with financial markets oversight.

and if you just get to the very bottom of this thing, certainly one of the primary causes was just terrible underwriting and was the securitization, securitization phenomenon that lacked transparency, that lack any kind of responsible risk retention. and these kinds of policies are very much embodied in dodd-frank financial reform. so, when you're thinking about housing policy, you have to think about housing finance, of course, and without proper oversight. when you hear tim geithner talk about this, every to progress he talks about making sure banks have adequate capital to support their liability. that didn't happen in the financial bust. and so that's a key part of this, too. >> let's drill down on that just a second. dodd-frank. where the critiques of dodd-frank is it's going to make it too hard for people who would

otherwise be good borrowers to get alone, and is going to make it too hard for home builders to get credit. could these regulations be too onerous for the fact that credit is needed to move the market? >> it's always a balancing act, and i guess what i look at it, my gut reaction would be no. next question? no. [laughter] >> we have some more. >> know, i think that, thinking about, to me the most meaningful economic analysis of what happened, got us into this mess was the underpricing a brisk. and yes, i am a more left-leaning progressive economist, but i still believe, and always will, when you screw up prices all hell breaks loose. and if you screw up the price of risk, you're asking for it.

and we asked for. by we i don't just mean by any stretch of imagination the public sector or the gses. this was initially a very much, i risked underpricing that you would see all throughout the private sector financial markets. so, it's absolutely appropriate that financial regulations does the kind of things i mentioned in my last answer that has risk retention in securitization, that has a larger capital backstop supporting the liabilities that banks and lenders hold on the balance sheet. that has consumer protection, that has a financial oversight board. all of that is critically important. and, in fact, i would probably twist your question around and say we obviously, policy went way too far in the other direction in terms of deregulation and lack of

oversight. and all based as i said in my comments, you know, all backed up by a very i think toxic economic philosophy that argued there's no need to regulate because markets will self correct. the mechanisms to perform the kind of oversight that has been, that dodd-frank as in it are not needed because they're built into the system. well, no, they are not. such oversight is very much needed. there's an interesting set of work by a great economist who came back into vogue during this because he thought exactly about this problem and he talked about, people talk about the minsky moment where the economy, where economic players, particularly financial markets go from being heavily risk, hugely underpriced risk to overpricing risk. they become hugely risk of birth. there is some in that, but, frankly, i see much more than just as he deleveraging. one more slight and then, i think this is a really underappreciated picture i'm

about to show you. maybe i'm not. this is a simple, you can get this with two mouse clicks if you go to your friendly federal reserve board website, but it's really an important picture that hasn't been touted enough. this is household debt service as a share of disposable income. it's the debt service ratio. but this is it takes all the money that people are spending, to service their debt, and divide that by all the disposal income in a comic. if this goes way up you tend to think people are highly leveraged and as it starts to come down, you can see a very big sliding down the leveraged scale. a lot of that deleveraging is true. my deputy always makes this point. a lot of that deleveraging is right off, charge-off, foreclosures. this isn't pristine for every paying off their debt the way you want them to. but that's part of the

deleveraging as well. what you see there is the debt service ratio is well back to its pre-recessionary levels. that suggest that you're back in a situation where the deleveraging cycle is working itself out. that's good for the economy speak on so glad you brought up risk. the moral hazards that remain in our economy, there's a large school of thought process along as the government guarantees some or all of the housing market, expletive delete or even implicitly with guarantees for the banks, to put up mortgages, that will always engender too much risk in the market. could that be the case? even after this crash and we stability of the possibly of another housing bubble that could tank the economy? >> people who take the long view, robert shiller wrote an article about that very question in "the new york times," it was

very good, a few weeks ago. and i commend it to you. he probably is the most scholarly person in terms of the long view of that kind of question, and he said this is kind of a hundred years thing, and he doesn't think it's going to happen again soon. from my perspective as a government economist we can operate based on -- we can't operate based on the. we have to set up the policy architecture such that risk is a programming balanced. so we can't really go too far one way or the other. and i think that's very much the spirit of president obama's view on it, that moral hazard is something that very much has to instruct the way we set policies up, like a loan modification. he have to try to target people who need help and not target people who don't, or people who will not be able to pay their loans off, even without. so you always have to be cognizant of moral hazard. but the thing i could say, so i

would say i think we have to balance right, but the thing i would say to those who argue, you are creating by any kind of a government backstop, whether its option one in a white paper which is for the low and moderate end of the bargain, at any government backstop will engender another bubble and bust. those people have to swear themselves to the question of do you really believe that the government, i'm not talking about our administration, i'm talking about administrations in years, let's hope robert shiller is right and we are not activist for many, many decades. but if you think th the governmt is in place at the time it's ever going to sit on the sidelines and let things crashed. there's just no economy that's ever done it. if you believe that then there's always -- i think it has to be considered.

>> you mentioned the foreclosure modification. it's a program that is just not gone up to expectations. the handbag program. what is wrong and is there anything you can do to fix it? >> is a program that i would argue is working a lot better now than when it started. but the fundamental core of your question is of course valid and important to us. but i think -- and i'll try to speak to that. we are always thinking about how to make, you know, our programs, particularly these, work better and we have some thoughts. but i think that to some extent the hamp program hasn't undeservedly at rap at this point in time. you are absolutely right regarding expectations and numbers of mods that we thought would be permanent now. and i can speak a little bit too wide those expectations haven't

met. but let's just talk about some facts that are worth considering. you know, more than 600,000 permanent modifications have begun since the program has been put in place, and there's about another 25-30,000 signing on every month. and at this point, nearly about one and a half million homeowners have entered trial mods since the program began. one of the statistics that i find really important about the program is that the median annual income of people have been helped by hamp is about 50,000, which is about the medium household income. and the median mortgage is about 230,000 which is around the median home price. so this is a program that is targeting the middle class as executive director of the task force i find it important. by the way, the median monthly

savings for the 600,000 people and a prominent mods are 540 bucks a month. you know, that's real money. and so that's really making a difference. hamp has also changed and it's improved the way mortgage market the drug industry. the middle class task force we looked into this, and so one of the things that's is people are coming in, are applying for hamp and find themselves in proprietary mods that are being offered by banks and servicers so that 6000 is a little depressed artificially by that, by that point. one of the things we did with the middle class task force which i think, folks might want to go take a look at is, we worked with the department of justice and hud to look at modification programs, counseling programs, ways that homeowners could find helpful of the country. we published a document for the

best practices and that is something i would encourage people if they're interested in this. in terms of making the brogue ramp work better, we've adjusted it along the way. i think one reason it hasn't met the expectations educrats pointed out haven't met, has to do with this balance and the moral hazard problem i mentioned earlier. we felt we couldn't build a credit box, and eligibility box that let in quote to many folks, folks that i couldn't pass what we call, what the industry calls a net presence, a net positive present value test. that is come you want to make sure you are helping people who can with help ultimately pay the loan, and not throwing good money after bad. so lets face it, there are people got into loans that they said they can't sustain it and all you're doing if you offer them a modification in

sustaining the inevitable that costs the taxpayer. but we make sure that the hamp program did not apply to the jumbos above 730,000. so we wanted to target the middle class which is the numbers would have. this doesn't apply to vacation homes or vacant residences. so we felt given this problem of trying to reach the right people we have to draw a box around it. i think there have been problems with documentation, with some of the servicing. and we are working on ideas to improve that. there's a task force now with 11 different agencies. there is of course the settlement discussions under way. i'm not going to speak to those, but that's a project of the state attorneys general working with the department of justice. so i think with a greater attention to ways in which servicers can make sure that they are thoroughly evaluating people from modifications, we

can do better. but i think you still have to tread that balance between doing as best we can, trying to get the numbers that were ambitious, no question about it, but without providing modifications to folks who either don't need them or ultimately will not be helped by the. >> act to the middle class. back to our heartland monitor poll. it's interesting to see just how much americans associate homeownership with a middle class. they associate more with the middle class and knowing to college, vacuuming wealth, and even having a secure retirement sort of a head of them come a comfortable retirement. so, clearly this is in the american psyche a really big deal. but i wonder, is it a symptom of the middle class or is it a driver? should we be trying to push people into middle-class, should we be promoting homeownership osha would be doing things to address the income stagnation of the middle class, other areas and allow homeownership to go

without? >> it's a real important question and i like the way you put it. i think we should come as i said in my opening comments, you know, and i think this comes very strongly out of the supplements, you know, i really believe that homeownership is part of the american dream for a lot of people. and i think you have to start from that place. but it's got to be sustainable. that dream can become a nightmare if it becomes unsustainable. and i mentioned both private and public were essentially doing too much to significantly underprice the risk of housing finance. and that creates as much a slight out of the middle class as a ladder into it, as mike colleague likes to say. i think there's a role and i

talk a lot about the rule should be. our white paper offers a set of options. i think what i try to do is talk about a balanced role. but usually something into question that hasn't been discussed enough, and i have a slide on it, which is a connection between actual middle-class living standards, the ability of the middle class family get ahead as they work harder, as they contribute to the nation's productivity growth, and their ability to climb into the middle class and stay there. part of that for many people is going to be owning a home. we haven't talked much about renting which we stress in our white paper is also an abort and a viable option. and in everywhere policy needs more help i think. but stick with your question for me and let's stick on this point. is probably one of the more fundamental points of my personal view on this as someone who has paid a lot of attention

to middle class well being over my career as an economist. what you see there is again, i think it's the blue line, is the bottom line, it's a real median family income, which rises throughout the '90s at a pretty good clip and is completely flat in the 2000. now, the 2000, the business cycle expansion of the 2000s was the first expansion in history of these data going back to the mid 1940s where the middle class median family income ended that expansion no higher than when it started. poverty rates were higher at the end of the 2000 expansion than they were at the beginning. at household and family meeting income were about the same or maybe even lower in real terms. but this was a period of strong productivity growth, and yet because of any quality that growth found, that growth did an end run around the middle-class,

and yet what you see there in the big gap between median family income and homeownership rates under the other line in the graph, you see homeownership rates climbing steeply throughout this period. completely despite the fact that median family income was flat. the homeownership, i'm not saying this is for middle-class people but certainly they are germane to the sister states and the question. look at that big gap between family income and homeownership rates over this period that developed because one was going up and the other was flat. and, of course, what fill that gap was credit. credit was the financial fascinations, and bus that i've been talking about throughout my comment. in order for the middle-class to sustain homeownership, two things have to happen. one is risk has to be accurately priced to financial markets. and i talked about that, and i think risk retention, securitization rules.

i've talked about banks holding adequate capital. there's the whole financial side of discussion, much better underwriting. but we also have to crack this nut that's been i think a very tough one for the middle-class for decades now, which is ensuring that the benefits of a growing economy actually flow to a large group of people who are helping to create that growth, and that's the middle-class. and as long as that wages in there, you're going to have i think the real problem of folks improving their living standards through, you know, financial credit, through borrowing, through ways that don't connect, good old-fashioned productivity income growth which was of course key to this economy and the growth of the middle-class and the postwar decade. >> youth with good enough of my question.

were going to throw it open to the audience now. there's a microphone over there and over there. if you just want to line up by the microphones and then we'll take your questions. and bonus points for anyone who can get jeered to show one of his remaining slides. spiegel it's not hard to get me to show slides. i'm easy. [inaudible] >> i don't don't think the microphone is on. >> i can't say how may times these microphones are not turned on in these kinds of settings. i don't get it. [inaudible] >> i read it. >> middle-class family are always trying to get their kids into the next best school districts. can we really fix the housing problem if we don't fix -- >> that's a great question.

and it's a succinct one, also. if you look at -- we are very much aware of that problem, and if you look at our white paper, which i commend to you. if you're interested in this discussion, at least in our administration's view on it, please read the white paper by treasury and had. i think one of the first sentences in the introduction says something to the effect of we need to have a housing system, a housing finance system that enables people to find affordable housing near good schools. so it is elizabeth is absolutely right, and it makes a ton of sense to approach that from the education side. it's a different seminal and one under the "national journal" is fully capable of having, i think you'd be hard-pressed to find an administration that has tried to

do more to improve exactly that problem. arne duncan lives and breathes that question, as president obama. i think the premise that if you could take a bad school and turn it into a good school, housing next door goes from being lousy to better. it's not the only part of the equation but it's a critical piece. the only thing i'll say is that, remember, the federal government's footprint in local education is not huge. it's -- we can make a difference and we are trying to, but what i would encourage you and anyone else who's interested in the question take very, very cicely right now is what's going on at the state and local level. we can have these great discussions and nice conference room here about imports of local education while out there in

gaza locality, you have folks lashing and burning. not in every case because they want to. in fact, if you're a governor or a mayor, you know that's where the rubber meets the road. i'm sure they would rather not in lots of cases. but, frankly, that problem is intimately related to state fiscal issues. something by the way we try to help a lot with in the recovery act. 350,000 educators and educational personnel had jobs that were preserved thanks to the recovery act. we were very much aware of that problem, but it is worrisome. >> we're going to go to decide now. >> hi. there is anonymity among hispanics and african-american organizations in concerns of folks on the right seem to be

pressing cra as a cause for a lot of our housing market woes, and that they seem to be feeling equal pressure on left when the administration's papers seemingly pushed less homeownership and higher cost of, and higher costs for home purchasing. which detracts from their view that homeownership is a way for minority communities to build networks and assets. where do -- what is the hope for minority stakeholders in this fight? a french model that has less ownership and has -- like the administered and pushes, or is there hope to try to preserve government involvement as it exists and not chuck it away? >> great question, and tried to be a little break so we can get more questions in your. i don't think there's much of an argument for the cra as a causal factor.

there's been a lot of argumentation trying to suggest that the housing bust and the ensuing recession was for the fall of government programs that supported low income housing and the evidence for that is extremely unpersuasive. so just, you know, get that out. every one of our options in our white paper has a solid role for federal housing administration in the low and moderate cost housing space. as you heard in my comments, when i say risk was underpriced, i mean it. and if the price of homeownership, not across the board, and obviously there are special, special considerations for lower income folks and as with the fha comes in. if the price of the mortgages, if the price of financing the

mortgage coast of x. basis points in a new policy agenda, you may recognize that as very consistent with my concerned about underpricing risk and with a set of reforms that certainly have a potential to change that. i guess i would argue that, like i think is implicit in your question, homeownership sustainable homeownership is in the key source of net worth for folks trying to make into the middle-class, and that's obviously the place -- the case for my as well. we have to be mindful of rental operation. one of things that fannie and freddie did pretty well over the tenure was to provide liquidity to rental markets took and it's something in our white paper we talk about as an important role for hud and for fha to try to

think about going forward. you know, half of the renters pay more than a third of their income on rent. wait, maybe -- i think maybe -- anyway, there's a large share, we mentioned this in the white paper, and large share of renters who pay well over a third of their income on rent. we introduce some ideas that perhaps there could be some sort of risk sharing between the private sector and the fha degrade more liquidity in rental markets. you know, the private sector financing of rent tends to be very much focused on the high end and not nearly enough on the low end. so i think both of those, both commitment to the private, commitment to homeownership through the fha and doing a better job of financing rental options at the low end would be how i would describe our goals speaker we have time for one more question. >> i look at report, and i hope

i got it right, it was saying that 20 to 30 somethings are the population, there's a lot less of the 45 to 50 somethings. back in the late '90s, early 2000 we were told to upgrade our homes and to get larger homes. so when the 45-50, 15 years or so from there looking to retire and downgrade, is the government looking at what's going to happen in 15, 20 years from now when there's going to be more supply than demand? >> definitely. by the way, i did have that right, half of all renters spend more than a third of their income on housing. very much so, serve. one of the things of course are looking at right now is a large inventory overhang.

while as someone who's both mindful of the current economy and the future economy, will look at a housing starts report like the one we just got with big negatives as problematic in the sense of gdp growth likely earlier flight or it also does show and you can see this in numbers that we are cutting through that inventory overhang. so, supply and demand, 15 years out is going to be much more of a demographic phenomenon that it is a bubble phenomenon, like we're dealing with now. i think the problem that we -- historically, we've had tremendous -- the kind of dynamic you're describing hasn't been a huge problem in america because we had very liquid housing. we've had with securitization, which i think you mentioned, or somebody mentioned, obviously we do much more securitization than they do in europe. covered bonds, which are an

interesting and a very useful and common source of funding in europe, much less so here. is a narrower piece of housing finance and a large securitization, the very liquid market that we have had here. and so folks have been okay in terms of the kinds of demographic dynamics you mentioned. i would argue that the problem is less one of demographics and supply and demand, and more want of that slide i should show the him come growth of the middle-class. assuming weekend and we're really going to try to get this right, the pricing right whether it's a guarantee, whether it's financial regulations that operate through financial channels in the housing finance markets, assuming we get the price right of mortgage borrowing, you've got to get, you've got to get folks income, you've got of middle-class folks

income not necessary going in lockstep with productivity but much more like the picture showed in the '90s that showed in the 2000s, growing at base. and if we can get an economy coming into place with income is working the way it should in that regard, then i think that's going to be okay. it's a 10, 15 year forecast. you always have to take such things with a grain of salt. what makes me out of -- optimistic about that is the market has historically dealt with inventory overhang's just the way it is dealing with it now. and i think the bubble part of this problem is going to be, is going to be gone well before them. >> i want to thank you all so much. jared, thank you. that was great. i just want to see if anyone wants to see the rest of your slides i'm sure he would be happy to bring it over to his house. bring your own writing bill. give a round of applause for jared

>> >> the forum continues with a panel of housing experts with the future on fannie mae and freddie mac. this portion of thecussion is one hour. his discussion of homeownership in america. and let me just quickly introduce, let's see how we are ranged here. sarah rosen wartell, executive vice president, center for american vice predent. served under president clinton. jerry hauer is chief executive officer ofthe national association of home builders and former work withboth the national association of altors and the national association of state housing agencies so he has seen this are many different angles. shanna smith is president of the national fair housing alliance. bravely serve as executive director of the fair housing center of toledo, ohio. and alex pollock, resident fellow at the american

enterprise institute, specializes in financial issues, formally served as president and ceo of the federal home loan bank of chicago. last night when we had a dinner that had all of our panelists, as well as some others, it was a rather glittering array of thinking and analysis about the housing industry. and i said then to paraphrase john f. kennedy, not since bill levitt dined alone had there been so much housing expertise in one place at one time. so we have a strong group for you to kind of kick around these issues. let me start with, you kw, what is the basic gap or dichotomy that we are oking at as you see in this poll, and even more eloquently in that video? americans remained attached to homeownership as an ideal in their own lives enormous percentages saying that they prefer it to renting. they would advise a family

member to buy a home. 90% said they would buy a home again. of homeowners despite all the turmoil in the market. and yet yesterday the commerce report home owners -- home sales are the lowest going back to 1960. so there's aspiration and then there's execution. what is the space in between? why is this personal desire for homeownership not translate into more actual people showing up in the model and putting a check them? >> i think the thing the chart that jared showed is really the key to the. we had a greater time during which there was a great deal of economic growth, but wages are stagnant and it was driven b credit or with credit, the box is now very much tighter and employment hasn't come back. that is at the income to support, or the confidence about

the continuation of income to support that kind of home buying that we need to really boost the economy. >> i would agree that the issue of credit right now is one of the primary drivers. right now the banks have overreacted to the point where it's impossible for many qualified homebuyers to get any kind of the mortgage anywhere in america. even in the markets around this country. and i want to point out that there is no national housing market. it is a series of local markets. some of which still have housing increasing in value. even in those markets it's impossible to get credit at the consumer and and it's even more impossible to get at the acquisition development and construction and. the second point i would make is that i think that the american consumer over the last couple of years has become very attuned to the fact that what happens in washington will control their pocketbooks more than their own decisions in a lot of ways. and i think right now the talk

of the credit problems that are being caused by overreaction here in washington, the inaction on stabilizing the secondary market for home mortgages is taking a toll on the american consumer. and the talk of tax reform and taking away incentives basically undoing, if you will, in these three areas over 100 years of housing policy in america has people sitting on the sidelines. they are scared. >> i think from a civil right point of view we look at the access to credit, and both my colleagues talk about credit, that could drill down in that we are looking at higher credit scores being required. we are looking at hher down payments. and people of color have historically been squeezed in a tight credit market. women, fema head of household, people with disabilities are squeezed out of the market. so if we don't have access to credit if we don't have undermid that make sense. jared said that went to an extent that we are in a swing

that where i've had lenders say to me, i'd rather make the loan to a ouple who is older, who may have a lower credit score, but have a long history of making payments. than to a 29 jeweled couple who have to good jobs higher credit score. so the industry is trying to figure out who are the going to loan to? and with the stagnant income that sarah discussed, we have to go back and look at what other appropriate loan products. 30 years fixed rate loans are the appropriate products for most people in america. the exotic context, you know, the arms, the option a.r.m.s, no docs, all of those, were products that were creating for a particular economic class. that was very high income who had increasing annual income. those products were pushed out to the middle class and low and moderate income people, which

before were sucked into the foreclosure rate that we see. we have to get back to the middle. be sensible about underwriting and make sure that down payments can be under 10%, and do good underwriting. two good underwriting. >> first of all let me say i think the american people re right to like homeownership in particular, and ownership in general. this isn't ideas with deep historical roots. thomas jefferson wrote in the declaration of independence as we all know, life, liberty and the pursuit of happiness. but the more common phrase, is life, liberty nd property in the virginia declaration of rights for example. that property addresses a profound part of our life. they can't be referred to in my mind is a typical economic or financial marke gap between the trend and the cycle. we have long-term trends, and an enterprising market economy they

tend to be going up on the train, but obviously we cycle around the train. we are in the down part of the cycle. house prices have basically fallen on a national basis, although i agree with jerry's point that national average is going to be perceptive. house prices have fallen back to their trend. but we're working our way through the bottom of the cycle. and that why we see some of the tensions that you mentioned. >> now, let's talk about what the trend is or can or should be. in the sense that we have two administration. we had the clinton administration and in the bush administration. they had a conscious goal of driving up the homeownership rate. when clinton came in it was 64% in 1993. i will talk about secretary of henry cisneros in the nicer greece a high of 69% in 2004. since then we have received and will talk about the enemy. to what extent can you talk

about products that were initially intended for those at the top being marketed to those much closer to the bottom. to what extent did the effort to expand homeownership as a national goal lead us into the waters, and attribute waters that we found ourselves in the last few years? and to the extent it did, is it something that should be replicated? isthat the train to get back towards 69, 70% of the country owning homes? >> first of all, 69% isn't a particularly high homeownership rate on an international basis. it's in someplace in the middle of the pack of advanced countries. and mid '60s is the middle of the pack number, not bad, but not particularly hi. i would guess that we will continue around that level. the notion that you should increase homeownership by creating excessive debt is an obviously bad nose and. we shouldn't have done it. people borrow, for example, with the extreme case 100% of the

cost of the house don't actually own the house. .. since the great home ownership ratio increase in this country took place in the savings and loan era post world war ii -- 1950's and 1960's -- we had a blip that reflected excessive

borrowing at the household level and at the financial system level, for example, freddie mae and -- fannie mae and freddie mac. >> did we get too far? >> the goal of home ownership as the only measure of success is probably the wrong one. the right measure of success is approaching every american to pelt with their needs. housing options for you, and home ownership made good sense. i also think there's a difference in the two periods thatou mentioned, the 1990s and the 2000s. in the 1990s we learned a lot about how to do affordable home ownership right, and we learned there are ways to mitigate risk of low down payments because home ownership is, ultimately, at the end of the day, one of

the ways we encourage asset development. we have enormous disparities in our society in wealth and asset ownership between particularly low and modern income and minority families and others, and we need give people access to home ownership kind of forced savings as one of the ways that we should be encouraging wealth development. in the 2000s we kind of decided home ownership was good even though it was clear these products were completely irrationally priced. and the fact that it was expanding home ownership made people unwilling to step in and take what were obviously, reasonable steps. so it's an appropriate goal to make sure access to home ownership is available to people who are ready on sustainable terms. it's not an appropriate goal to say everyone should be homeowners whoever they are at any point. >> the other big difference as jared bernstein alluded to last night was when home ownership rates were rising in the mid '90s, so was the median p --

median income. jerry, some people would argue, bacally, there's an upper limit of given where the economy is of the share of people who can really afford and are willing to be responsible homeowners and service their mortgage and so forth and that we simply went out beyond the boundary. what is your take? >> i think from an economic perspective, clearly, we went beyond the boundary. there were problems that have caused us catastrophic results. but you also have to take into account the fact that housing policy is a combination of social and economic policy, and as my colleues are pointing out here, i think we do have an obligation with prudent underwriting and intelligent lending practices to get as many people as want to be homeowners who can afford to be homeowners. so i still think that what the bush administration and what the clinton administration tried to do were the right things. i think that we in the industry have to take our fair share of the blame for taking it too far.

the goal wasn't too lofty, the execution was bad. >> well, shanna, let's turn this around for a minute. if talking of easing off in efforts expand home ownership, who are we talking about in terms of not moving into the ranks? a big part of this was, as sarah suggested, closing the gap between minorities and whites in home ownership. that was kind of a theme, a subtheme of the overall effort over these two administrations. if we're saying that we can't really get back up to those high levels, is that imless sitly saying we're accepting that gap between minority and white home ownership, and should we be accepting that? >> my question was going to be who's that 60%, and wt's happened to latinos, african-american, asian-americans, immigrants? those families were buying homes and sustaining the homes. what happened to them in the market was the re-fi pushing and the adjustable rate mortgages

and people saying, you know, you can get this lower intere rate. and then as sarah was saying, in the '80s and '90s the community development plans across the country helped build new housing for low and moderate income families, and they were in the home home ownership mark. they were there. i think that we have an obligation because of the discrimination that happened during this whole process and what interests me is when people, particularly economists, talk about the fall in the market and the foreclosure, those of us in the civil rights movement saw this issue happening in the '90s when the predatory lenders and the people pushing arms went into the senior citizen, black neighborhoods across america, stripped them of their equity. at that point pushed it then in the 2000s and not only stripped the la -- latinos and african-americans, but then the middle class white families.

so we have to look at the impact of discrimination, regulation, enforcement of the fair housing laws, fair lending laws so that people of color get to get back into the market. >> well, let's say, i mean, i think everybody agrees, alex put it most pointedly, expanding home ownership simply by expanding debt did not turn out to be a good strategy. >> right. >> if we want to continue home ownership for those underremitted now, say african-americans and latinos, so forth, what is a more sustainable way to do it? are there strategies that can do that without leading to the overextension and the kind of market disruption that we saw? i it's based -- i think it's based on loan products. in the past fannie and freddie created and suggested products to the u.s. department of housing and urban development that had 3%, 5%, 10% down payments. they also had products that they wanted to introduce that the regulators didn't let them that would allow new home buyers to

get what would be an insurance. because most of the people are not buying new homes, i'morry, because they can't afford them. but they're buying existing homes, and these products would allow for a payment to be made so that every year the systems in the house, the furnace, the air-condition, the roof, all the major systems would be checked, and if they needed assistance, that insurance would pay for repairs to sustain the house that low and moderate income people could buy. the regulators wouldn't let that go through. so if we're going to increase this, we have to have special loan product programs that people qualify for, make sure they can sustain the monthly payment and to have a payment to sustain the house at the same time. we can do it. we did it in the '80s and 't 't -- '90s. >> alex, should we be trying to increase it? >> sarah talked about an, i'll say old-fashioned mortgage idea. and what we continually discover

in finance is the old-fashioned ideas were right and the new ideas turn out to be misleading. sarah talked about forced savings through a mortgage. i'm not so big on forcing people to do things in general or on trying to, you know, guide them or nudge them -- >> nudge, nudge. that's -- >> i'm not big on that either. but i am big on savings. so let's think about what paying off yourortgage means. this, i think, somepla you and i agree. your mortgage means savings. here's this old-fashioned idea. you get the mortgage, and you y it off over time. little by little. and you don't think about continuingly releveraging the property. and, therefore, never building up the equity. so i would say one of the biggest things we could do that would be helpful throughout the society is a reemphasis on the savings part of housing finance

which is you really want to pay this offso when you get to 60, 5 years old, you actually own the house. we mentioned last night around 35% of homeowners in the u.s. have no mortgage. they own the house outright. well, that's a great aspiration. >> how would you encourage that? how, in fact, could you move people -- >> well, we have to rediscover this idea of savings. i like to say before fannie and freddie the gse era we had the savings and loan era. didn't end happily either, but there was something important about the name savings and loan. we forgot about the savings part of savings and loan, and the savings came first and then the loan. >> is it just exhortation? how do you do it? >> well, there are a host of products that were being experimented with and largely driven out of the market when this other stuff was so easily available that brought home ownership together with special

underwriting if you had gone through counseling programs. there were shared equity which is where people are buying into properties but then have limits on what they can sell the homes for. so they get to do a certain amount of savings, but then some of the additional appreciation goes into preserving the property for affordability for the next family. they get their next stake, they can move on. >> that was the bank or the community organization there? that would have been shared? >> usually a community organization, a land trust often owns the, has the -- owns the, creates the trust that does that, but then they find a bank to finance loans under these terms. there are ways in which you can have shared rainy day funds so that people can deal with the roof that needs fixed. most people don't have contingency funds, or these products where in the event you have a blip in income, you can get insurance to cover the month. there are a variety of innovative products we could test. one of the most important things we found during the crisis was delivery